Oil holds near $65 as U.S. stockpile drop counters OPEC fears

Oil traded near $65 a barrel as an industry report showing a drop in American crude stockpiles helped counter fears that supplies may gain after the U.S. was said to ask OPEC to boost output.

Futures in New York were little changed, following a 1.2 percent advance on Tuesday. The American Petroleum Institute was said to report nationwide crude inventories fell over 2 million barrels last week. Meanwhile, the U.S. government has asked Saudi Arabia and some other members of the Organization of Petroleum Exporting Countries to increase output by about 1 million barrels a day, according to people familiar with the matter.

Oil is trading near the lowest level in almost two months after Saudi Arabia and Russia signaled in late May that they were ready to ease output curbs to fill potential supply losses in Iran and Venezuela. Declining Venezuelan output has been a key support to prices in recent months, despite the nation’s President Nicolas Maduro talking up its output potential on Tuesday. As speculation swirls over whether OPEC and its allies will reach a consensus to relax caps at a meeting in Vienna later this month, Goldman Sachs Group Inc. said the outlook for oil remains bullish.

“The API number, if confirmed should help prices,” says UBS Group AG analyst Giovanni Staunovo. “There have been stories on Venezuelan output, but the market should stay in deficit.” [read more]